BUS FPX 4068 Assessment 1 Investigative Accounting Practices

BUS FPX 4068 Assessment 1 Investigative Accounting Practices

Student Name

Capella University

BUS-FPX4068 Contemporary Auditing Using Investigative Accounting Practices

Prof. Name:

Date

Case 1: Investigation for Merger

Types of Investigations for Forensic Accounting Firm

In the context of Southeast Ag Supply Company’s potential merger, a forensic accounting firm is essential to ensure transparency and accuracy in the process. Forensic accountants perform three primary types of investigations to support mergers or acquisitions effectively.

1. Valuating the Company: This involves reviewing financial records, including accounts payable, receivable, earnings, and cash flow statements, to determine the accurate value of the company.
2. Assessing Return on Investment: A detailed examination of income statements and balance sheets over several years helps to understand the company’s financial health and potential returns.
3. Performing Due Diligence: This ensures the accuracy of the company’s books, accounting systems, and internal controls, minimizing risks during the merger (Gibson, 2021).

Types of Outside Assistance

A forensic accounting firm may require support from external experts to perform a thorough investigation.

1. Risk Management and IT Experts: These professionals assess vulnerabilities, such as cyber threats, and recommend improvements to internal controls.
2. Legal Professionals: In cases of fraud or embezzlement, lawyers provide guidance on presenting evidence and pursuing legal action.
3. Specialized Accountants: Accountants with expertise in accounts payable or receivable assist in identifying discrepancies and tracing fraudulent transactions (Hopwood, Young, & Leiner, 2011).

Case 2: Investigations in Civil vs. Criminal Matters

Differences in Investigations

Civil investigations primarily involve assisting in filing complaints, gathering pretrial evidence, and testifying in court. Criminal investigations often go further, with forensic accountants working alongside law enforcement to secure warrants, make arrests, and support plea negotiations.

Similarities in Investigations

Both civil and criminal investigations share common elements, such as formal trials involving plaintiffs and defendants, the burden of proof, and potential jury trials. Forensic accountants, attorneys, law enforcement, and courts play significant roles in both types of cases (Hopwood, Young, & Leiner, 2011).

Specialized Training for Investigations

Forensic accountants require diverse skills, including expertise in finance, accounting, and legal matters. Additional training in surveillance, interviewing techniques, criminology, and IT enhances their effectiveness in uncovering fraud. Strong communication skills are essential for presenting findings and collaborating with legal and financial professionals (Hopwood, Young, & Leiner, 2011).

BUS FPX 4068 Assessment 1 Investigative Accounting Practices

Case 3: Reasonable Assurance

Opinions on Reasonable Assurance

Derek Lodge’s perspective on reasonable assurance highlights the cost-effectiveness of implementing systems to prevent financial misstatements. Conversely, Amber Johnson’s viewpoint emphasizes rigorous compliance for maximum protection against fraud.

Challenges in Preventing Financial Fraud

Completely preventing financial statement fraud is difficult due to inherent limitations in systems and human factors. However, robust internal controls significantly mitigate these risks (Hopwood, Young, & Leiner, 2011).

Impact of Reporting Structure

An internal auditor reporting directly to the CEO can strengthen fraud prevention by ensuring higher levels of accountability. However, the CEO must actively foster a transparent and compliant organizational culture to enhance the auditor’s effectiveness (Hopwood, Young, & Leiner, 2011).

Case 4: Discovery of Fraud

Actions Regarding Discovered Fraud

When fraud is discovered, Rachel Fancy should systematically document evidence, develop a fraud theory, and conduct interviews while maintaining objectivity. Following established procedures ensures credible and legally compliant investigations.

Impact on Audit Procedure

The discovery of fraud should not alter the audit procedure. Rachel must remain impartial and complete the audit as planned, ensuring professional and unbiased reporting.

Reflection in the Audit Opinion Report

Rachel’s audit opinion report should detail the fraudulent findings and recommend remedial measures. Engaging relevant stakeholders, including the board of directors and legal authorities, ensures appropriate resolution of the fraud (Hopwood, Young, & Leiner, 2011).

References

Gibson, N. (2021, March 29). SPACS: Due diligence forensic approach to minimize litigation risk. Retrieved from Forensic Risk Blog

Lowers Forensics International. (2020, February 27). Financial forensics blog. 3 Reasons why a forensic accountant should be a part of the M&A due diligence team. Retrieved from Lowers Forensics

BUS FPX 4068 Assessment 1 Investigative Accounting Practices

Hopwood, W. S., Young, G. R., & Leiner, J. J. (2011). Forensic Accounting and Fraud Examination (2nd Edition). McGraw-Hill Learning Solutions. Retrieved from VitalSource

BUS FPX 4068 Assessment 1 Investigative Accounting Practices